Employers See Some Answers in Testing : Personnel: More companies are giving mental and physical tests in an effort to predict job performance.

O.C. BUSINESS: THE YEAR AHEAD. Sixth in a series on trends affecting business. Today: Workplace.

If you think you took your last do-or-die test to graduate from school, think again and start sharpening your pencil.

An increasing number of companies are instituting batteries of tests designed to predict whether job applicants will be productive, drug-free, honest workers.

Employers are relying more on test results in part because the labor pool has been shrinking nationwide. That situation is particularly noticeable in Orange County, where the unemployment rate has sunk to 2.9%.

The tests include urine analyses for illicit drug use and paper-and-pencil tests intended to indicate ability to learn, ability to work with others and propensity for dishonesty.

"As your pool of available applicants shrinks, there aren't visibly competent applicants flowing into your office and you have to be more careful about who you pick," said Larry Ball, regional manager for the Merchants and Manufacturers Assn. in Orange County.

Rebecca Chormicle, administrative officer for Southern California Bank, which is based in Downey and has six branches in Orange County, said she began giving general intelligence tests to teller applicants 18 months ago because she had difficulty finding people able to learn the job. It has worked well, she said. "When they do well on the test, they do well in teller school."

About a month ago, Right-O-Way Inc., a trucking and air freight forwarding company in Tustin, began giving aptitude tests to employees seeking management positions. Company President Alex Milovic said it costs between $300 and $800 to administer the personality and aptitude tests, depending on the job being sought. He said the tests are worth their costs to get the best person for a job.

A major concern among many employers, retailers in particular, is employee theft.

"There has definitely been increased business for paper and pencil honesty tests," said Art Davis, regional sales manager for London House, which is a leading publisher of such tests and has an office in Costa Mesa.

Davis said the demand for written honesty tests has increased since 1988, when a federal law prohibiting the use of polygraph tests for pre-employment screening was implemented. He said, however, that although these tests are being used increasingly in California, the state is lagging behind others because there is a greater concern here for employees' rights.

Many companies, though, question the ability of such tests to measure a trait such as integrity.

Davis said that in 1989, about 25 organizations in Orange County, ranging from convenience stores to banks, bought personality tests from his company. The tests include questions about honesty such as "How trustworthy are you?," "Do you think, 'Once a thief, always a thief'?," and "Does everyone steal a little?"

Bill Dombrowski, vice president of corporate affairs for Carter Hawley Hale Stores, said that organization, which operates 113 department stores, the Broadway among them, has for two years been using "dependability" tests in hiring hourly employees, mostly sales people. He said that last year, 11,000 of 53,000 applicants were immediately eliminated from consideration because of their test answers.

Denise Preston Hunter, manager of employment and employee relations for Carl Karcher Enterprises in Anaheim, said that company is "in the process of investigating some test we might use" to determine honesty. She said the company is carefully studying the matter to make sure that the test adopted is valid and that it will not unfairly discriminate against any group.

The most dramatic growth in pre-employment testing, however, has been in drug screening, largely because the federal government has been requiring defense contractors to test workers dealing with classified or sensitive projects. In addition, the Department of Transportation this month began requiring transportation workers to submit to random drug testing.

Raymond C. Kelly, a toxicologist and laboratory director of Laboratory Specialists Inc., which conducts drug testing for more than 2,000 companies nationwide, said drug testing has taken a strong hold in the private sector.

"Five years ago, less than 5% of the Fortune 500 companies did drug testing," Kelly said. "Now it is more than 50%."

Employment lawyers say that a state appeals court ruling in November upholding a private company's right to test job applicants for drug use is bound to encourage some companies that had been hesitating to have testing programs for fear of litigation.

Similarly, said Ball of the Merchants and Manufacturers Assn., employers in recent years have become less afraid of infringing on civil rights with general intelligence and other aptitude tests. But he said he expects that in the future, federal law enforcement agencies will refocus on the potential for such tests to unfairly discriminate against racial minorities and other groups. That in turn, he said, would probably lead to a greater effort to determine the validity of some tests in predicting job performance. Not all tests available today are reliable, he said.

But many employers are apparently deciding that the legal risk of administering aptitude and honesty tests is much less than the risk of hiring an incompetent employee who, if fired, may later sue for wrongful termination.